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Cryptocurrency News Articles
Visa Introduces Fiat-Backed Token Platform (VTAP) for Banks
Oct 04, 2024 at 07:49 pm
Visa recently launched the Visa Tokenized Asset Platform (VTAP) to help banks issue fiat-backed tokens on blockchain networks. Using the platform, it is possible to mint, burn, and transfer fiat-backed tokens through financial institutions.
Visa has recently introduced the Visa Tokenized Asset Platform (VTAP) to aid banks in issuing fiat-backed tokens on blockchain networks. This platform allows for the minting, burning, and transfer of fiat-backed tokens through financial institutions.
In 2025, BBVA will conduct live pilots on the public Ethereum blockchain to test VTAP.
Visa Introduces Fiat-Backed Token Platform for Banks
VTAP tokens serve as a bridge between traditional banking and blockchain, enabling banks to issue and manage fiat-backed tokens. To maintain stability in blockchain-based financial transactions, the tokens are backed by fiat currencies.
With its user-friendly integration using secure APIs, VTAP allows banks to connect their existing systems to blockchain networks with minimal technical effort. Participating banks gain access to Visa’s sandbox environment, where they can experiment with minting and handling these tokens.
BBVA Leads Blockchain Testing with Visa VTAP Pilot
In a sandbox environment, BBVA will become the first bank to test VTAP and explore its functionalities. Prior to a live pilot, the bank has been experimenting with offering, exchanging, and redeeming bank tokens on test net blockchains.
The pilot will take place on the public Ethereum blockchain in 2025, marking a significant step in blockchain adoption by the banking sector.
To test VTAP capabilities in a real-world setting, BBVA will involve pilots with select clients. By leveraging Visa’s platform, the bank aims to expand its market reach and offer innovative financial solutions to its customers.
The partnership between the bank and Visa could pave the way for other banks to integrate blockchain technology into their operations. If successful, it could set a precedent for broader industry adoption.
Programmability and Interoperability: Simplifying Blockchain for Banks
One of VTAP’s key strengths is its programmability, which allows banks to deploy fiat-backed tokens within smart contracts, among other use cases. This capability can automate complex financial workflows, such as managing lines of credit or tokenizing real-world assets. Smart contracts streamline processes more efficiently, reducing the need for manual oversight and enabling banks to operate with greater efficiency.
Furthermore, being interoperable, VTAP can operate on top of various permissioned and public blockchain networks. It enables banks to participate in a wider range of blockchain-based financial activities (including tokenization of real-world assets, such as commodities and treasuries). Across different blockchain ecosystems, Visa aims to facilitate seamless operability, helping banks achieve a broader service offering.
Additionally, it provides secure cross-chain asset exchange to easily and securely exchange tokenized assets across multiple blockchains for seamless trading. The aim here is to help financial institutions navigate the complexities of blockchain technology.
Visa VTAP’s Role in Blockchain and Financial Services Integration
Visa's participation in central bank digital currency (CBDC) pilots showcases its role in driving blockchain adoption within the financial services sector. The company has collaborated with the Central Bank of Brazil and the Hong Kong Monetary Authority to support the development of CBDC solutions.
In addition to its established expertise in securely handling payments and tokenization, Visa emerges as a pioneer in blockchain-based fundamental financial systems.
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